FOR IMMEDIATE RELEASE
January 27, 2006
Contact: Richard Deutsch
Phone: 202-261-7573

• Read the AHQA Policy

AHQA Formalizes High Standards for QIO Accountability

Code of Conduct For Compensation, Travel, Conflict of Interest

Washington , D.C. — The board of directors of the American Health Quality Association (AHQA) today released a new policy to assure that all Quality Improvement Organizations (QIOs) conform to the highest standards for business practices, governance, and public accountability.

AHQA, which represents the national network of QIOs, is asking all QIOs to “embrace and promptly implement” this formal code of conduct. The board approved adoption of the standards in late December. Already, more than a third of all QIO boards—in states home to more than half the nation’s Medicare beneficiaries—have signed on.

The new AHQA policy, “Standards for Organizational Integrity of AHQA Institutional Members,” says that all QIOs “must adapt themselves” to fully participate in an evolving health care system and respond to public expectations for greater transparency and accountability.

“Most QIOs already follow these standards. Now we are asking that all QIOs publicly endorse and fully comply with this policy,” said AHQA president Jonathan Sugarman, MD, MPH.

The QIO program is the largest federal initiative to improve the quality of American health care. Its goal is to save lives by reducing medical errors and promoting the spread of proven clinical practices. All but four QIOs are nonprofit organizations.

The code of conduct policy adopted by AHQA is based on similar voluntary standards endorsed earlier this year by Independent Sector, a coalition of more than 500 of the nation’s leading nonprofits and charities.

The new AHQA policy addresses board and executive compensation, board diversity and independence, travel expenses, and procedures to prevent and mitigate conflicts of interest.

QIO Boards to Include More Consumers and Community Stakeholders

Over the past decade, QIO work as Medicare contractors has shifted from a focus on reviewing medical records to monitor quality of hospital care to broader, proactive efforts to promote more effective and safer care in hospitals, physician offices, nursing homes, and home care. AHQA’s policy statement concludes that: “In light of constantly expanded QIO consumer protection responsibilities, strong consumer representation is essential.” The statement calls on every QIO to “ensure a high level of consumer and other stakeholder representation on its governing board” and ensure that at least one-third of the board members are not compensated as employees or contractors of the QIO. It says every QIO should find ways to “continuously infuse board deliberations with new and different perspectives.”

Board/Executive Compensation Standard Exceeds Requirements of Law

In recent years, compensation of nonprofit boards has increasingly been a subject of public scrutiny. As Medicare contractors, every QIO’s expenses are audited every year by independent government auditors.

Typical charities, which rely on their boards of directors for fundraising, do not pay their boards. QIOs, however, earn their revenue through contracts and rely on boards for expertise in the field of quality measurement and improvement. About two-thirds of QIOs compensate board members for board service, who also serve as ambassadors to advance QIO work in their communities. The median payment to a QIO board member in 2005 was $1,530.

AHQA is asking QIOs to implement policies the IRS has established as its highest voluntary standard of reasonableness for compensation of board members and executives. These policies will ensure that QIO boards and executives are only compensated at levels comparable to other nonprofits and investor-owned firms where highly trained professionals commit significant time to board service. The policy also calls on QIOs to adopt and enforce performance standards for attendance and performance of board members, and to establish procedures for removing board members whose services “are no longer sufficient.”

The AHQA policy asks the many QIOs that are nonprofits but not organized as charitable organizations to adopt the same high standards for governance and compensation that the IRS has created for charitable organizations.

Clarification of Travel Policies

QIO travel expenses must comply with federal regulations for Medicare contractors and are reimbursable only if judged reasonable by federal auditors in their annual detailed review. To make clear to the public that QIOs are financially prudent, AHQA’s board is asking QIOs to adopt policies that require all travel, whether for Medicare work or other customers, to be undertaken in a “cost effective manner.” The policies must provide clear guidance on the types of allowable expenditures, define documentation required for reimbursement, and prohibit reimbursing expenses for spouses or dependents who travel with QIO staff or executives.

Avoiding Conflicts of Interest

In the QIO law, Congress explicitly encourages QIOs to have business relationships other than their contracts with Medicare. This lowers government contracting costs by sharing overhead with other customers. At the same time, Medicare rules to prevent conflicts of interest are tough and prescriptive, and are written into every QIO contract with Medicare. AHQA is asking all QIOs to go further by adopting policies to prevent any real or apparent conflict of interest that may arise from business relationships outside their Medicare contracts. Under the AHQA standards, QIOs are to adhere to the model policy recommended by the IRS for prevention and mitigation of conflict of interest.

Setting the Record Straight

Formal adoption of the AHQA code of conduct is intended to clear up misperceptions about whether QIOs are properly using federal funds as Medicare contractors and fully serving the public interest as nonprofits.

“The only way QIOs can succeed is by earning and maintaining the trust and respect of patients, providers and public policymakers.” said David Schulke , AHQA’s Executive Vice President. “Adoption of these standards by every QIO will show the public that QIOs are committed to fiscal integrity and accountability to a broad array of stakeholders. This is just the first step. We are preparing a number of additional far reaching proposals for improving QIO service to the public and modernizing the work of the program.”

The American Health Quality Association is dedicated to improving the safety and effectiveness of health care. AHQA represents the national network of Quality Improvement Organizations (QIOs) that work with hospitals, medical practices, health plans, long-term care facilities, home health agencies, and employers to encourage the spread of best clinical practices and improve systems of care delivery.